Global Economic Watch


Recent Posts



  • Home Builders' Rising Confidence

    There may be a lot of unsettled foreclosures, and a lot of homeowners under water, but one key group keeps feeling better and better about the housing market. Home builders. The NAHB/Wells Fargo Housing Market Index has reached its highest level in four years. The index is now at 29, up from 25 in January. That's the fifth consecutive month home builder confidence has risen, according to the National Association of Home Builders . From the NAHB release: “Builder confidence has doubled since September as measured by the HMI,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “Given the recent improvements in new home starts and the increasing number of markets included in the NAHB/First American Improving Markets Index, this consistency suggests that the housing market is moving toward more sustainable growth.” Rutenberg cautioned that the housing sector remains very fragile with significant differences between individual markets, and said policymakers must guard against actions that could impede or even reverse the gains of recent months. “This is the longest period of sustained improvement we have seen in the HMI since 2007, which is encouraging,” said NAHB Chief Economist David Crowe. “However, it is important to remember that the HMI is still very low, and several factors continue to constrain the market. Foreclosures are still competing with new home sales, and many builders are seeing appraisals come in at less than the cost of construction. Additionally, prospective home buyers are finding it difficult to qualify for a mortgage.” Read the full release here .
  • Home Builder Confidence Lowest Since June

    Attendance is down at the International Home Builders Show in Las Vegas this week. And so is confidence among builders across the US. From the National Association of Home Builders : Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor. The January HMI fell one point to 15, its lowest point since June of 2009. Two of its three component indexes registered one-point declines, with the index gauging current sales conditions and the index gauging traffic of prospective buyers falling to 15 and 12, respectively. The index gauging sales expectations in the next six months held even, at 26. The HMI edged down by a single point in three regions, with the Northeast falling to 22, the Midwest down to 11 and the South declining to 16. The HMI fell three points in the West, to 16. Read the NAHB report here .
  • Projecting A Drop in Home Ownership

    Calculated Risk has a very interesting post on home ownership rates. Professor Arthur Nelson of the University of Utah is projecting a drop of 63.5% in the home ownership rate by the year 2020. As Calculated Risk writes: This has huge implications for builders. Using Nelson's figures, home builders will only have to build about 800 thousand (on average) single family units per year through 2020 (after the excess is worked off). This is far below the 1.25 million per year seen in 2004 and 2005. That level of production is not coming back. The writer does not agree with the overall projection--expecting more "older couples and singles to stay in their homes"--but does think the trend is dead-on. The implications of this shift for cities is significant, as it likely means more people moving back into urban centers with high density of rental properties. Read the full post here . (Unfortunately, Nelson's paper is no longer available online).
  • Housing Starts Continue to Drop

    Housing starts fell in April to a seasonally-adjusted annual rate of 458,000. This marks a 12.8 percent drop from March, and a 54.2 percent drop from April, 2008, according to the US Census Bureau . The drop is the result of fewer multi-family homes being built. Single family housing starts actually rose 2.8 percent in April. The Census Bureau's release is available here . This data comes just a day after the National Association of Homebuilders announced its Housing Market Index (HMI) --a measure of builder confidence--has reached an eight month high. Read the release here .